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International Legal Information
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The funds described in the following pages are administered and managed by companies within the Northern Trust Group (“Northern Trust”) and can be marketed in certain jurisdictions only. It is your responsibility to be aware of the applicable laws and regulations of your country of residence. Further information is available in the Prospectus or other constitutional document for each fund.
The contents of this site have been prepared solely for informational purposes. None of the information contained in this site constitutes an offer to buy or sell or is a solicitation to buy or sell any security, product, service or investment, nor does any opinion expressed on this site constitute a recommendation or investment advice.
The funds described are not available for distribution to or investment by US investors. The shares will not be registered under the US Securities Act of 1933, as amended (the "Securities Act") and may not be directly or indirectly offered or sold in the USA or any of its territories or possessions or areas subject to its jurisdiction or to or for the benefit of a US Person. By accessing this part of the site you confirm that you are not a "US Person" (within the meaning of Regulation S under the Securities Act) and are located outside the US.
The following describes important information about Northern Trust's Irish-domiciled funds (the "Irish Funds") and should be read carefully before investing. If you have questions or concerns about the contents of the Prospectus of an Irish Fund or the suitability of an investment for your particular situation you should consult your bank manager, solicitor, accountant or other financial adviser.
The Irish Funds have been authorised by the Central Bank of Ireland (the “Central Bank”) as Undertakings for Collective Investment in Transferable Securities. This authorisation however, does not constitute a warranty by the Central Bank as to the performance of the Irish Funds and the Central Bank shall not be liable for the performance or default of an Irish Fund. Authorisation of an Irish Fund is not an endorsement or guarantee of the Irish Fund by the Central Bank nor is the Central Bank responsible for the contents of this website.
Potential subscribers and purchasers of shares in an Irish Fund should inform themselves as to (a) the possible tax consequences, (b) the legal requirements, (c) any foreign exchange restrictions or exchange control requirements, and (d) any other requisite governmental regulatory or other consents or formalities which they might encounter under the laws of the countries of their incorporation, citizenship, residence or domicile and which might be relevant to the subscription, purchase, holding or disposal of such shares.
The distribution of the Prospectus of each Irish Fund and the offering or purchase of its shares may be restricted in certain jurisdictions. No person receiving a copy of the Prospectus or subscription form of an Irish Fund in any such jurisdiction may treat the Prospectus or the subscription form as constituting an invitation to that person to subscribe for shares, nor should that person in any event use the subscription form, unless in the relevant jurisdiction such an invitation could lawfully be made to that person and the subscription form could lawfully be used without requiring compliance with any registration or other legal obligations. Accordingly, the Prospectus of an Irish Fund does not constitute an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not lawful or in which the person making such offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make such offer or solicitation.
The Central Bank has neither reviewed nor in any way commented upon the fund documentation of Northern Trust's non-Irish-domiciled funds. No public offer is made of such funds within the meaning of applicable Irish law. The documentation of such funds has not been prepared in accordance with the laws of Ireland. The documents have not been reviewed, approved or authorised by any regulatory authority or exchange in Ireland and therefore may not contain all the information required where a document is prepared pursuant to applicable Irish laws.
The Irish Funds have not been registered with the Swedish Financial Supervisory Authority (Sw. Finansinspektionen), pursuant to Chapter 1 Section 7 of the Swedish Investment Funds Act 2004 (Sw. lag (2004:46) om investeringsfonder). Accordingly, the Irish Funds may not be marketed or sold in Sweden for the purposes of the Investment Funds Act and applications to subscribe or redeem Shares in the Irish Funds will only be considered if sent directly to the Irish Funds outside Sweden.
The Irish Funds are not available for distribution through this website to any type of investors in the Netherlands.
Applications to invest in any fund referred to on this site, must only be made on the basis of the offer document relating to the specific investment (e.g. Prospectus or other applicable terms and conditions). Our products and services are subject to the terms and conditions and disclaimers of the applicable agreement governing their use.
As a result of money laundering regulations, additional documentation for identification purposes may be required when you make your investment. Details are contained in the relevant Application Form, Prospectus or other constitutional document.
Northern Trust has not considered the suitability and appropriateness of any investment you may make with us in the context of your personal circumstances. If you are unsure about the meaning of any information provided please consult your financial or other professional adviser.
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Past performance is no guarantee of future performance.
The value of investments and the income from them may go down as well as up and are not guaranteed. You may not get back the amount you invested.
Rates of exchange may cause the value of the investments to go up or down.
Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially.
For your protection, telephone calls are usually recorded.
ACCRUED INTEREST: Coupon interest that is earned on a bond from the last coupon date to the present date.
AGENT: A party to a loan or borrow transaction that acts on behalf of a third party client. The agent does not usually take any risk in the transaction
ARBITRAGE: Buying and selling similar securities, commodities or currencies in order to profit from temporary price discrepancies between two market prices.
ASLA: The Australian Securities Lending association (ASLA) formed in August 1991 in response to a perceived need amongst need amongst industry participants for unified representation in regulatory and other issues relevant to its members.
BASIS POINT: One hundred basis points equal one percent. One basis point is 0.01%
BENEFICIAL OWNER: A party that is entitled to the rights of ownership of property. In the context of securities, the term is usually used to distinguish this party from the registered holder (a nominee for example) that holds the securities for the beneficial owner.
BOND REPO: The transaction whereby one party sells securities (e.g. Government Bonds) to another, agreeing to repurchase (Repo) the securities at a future date at a pre-agreed price. Repo usually refers to Bond Repo, but this transaction type is increasingly used with other marketable securities too, as evidenced above.
BORROWER AGREEMENT: Securities lending contract between the lending agent and the borrowing firm.
BUY-IN: The practice whereby a lender of securities enters the open market to buy securities in order to replace those that have not been returned by a borrower. Strict market practices govern the buy-in process.
BUY/SELL-SELL/BUY: Types of bond transactions that, in economic substance, replicate reverse repos and repos, respectively. These transactions consist of a purchase (or sale) of a security versus cash with a forward commitment to sell back (or buy back) the securities. Used as an alternative to repos/reverses. These transactions are often un-documented, for a set duration and the transaction structure does not allow for variation margining.
COLLATERAL: Securities, financial instruments or deposits of the currency that are delivered by the borrower to the lender to support a loan transaction. In repos and buys-sell backs the collateral is considered to be the securities side of the transaction. In securities lending the collateral is the cash or securities supplied in exchange for the specific borrowed securities.
CORPORATE ACTION: A corporate event in relation to which the holder of the security must or may make an election or take some other action in order to secure its entitlement and/or to opt for a particular form of entitlement (see also equivalent).
CORPORATE EVENT: An event in relation to a security as a result of which the holder will be or may become entitled to: a benefit (dividend, rights issue etc.); or securities other than those which he holds prior to that event (takeover offer, scheme of arrangement, conversion, redemption etc.). This type of corporate event is also known as a stock situation.
COUPON DATE: The date upon which the issuer of an interest paying security makes an interest payment to the registered holder (as of the ex-coupon date) of that security. Coupons may be paid (in most cases) annually, semi-annually or quarterly.
CROSS-CURRENCY REPO: A repo in which the securities are de nominated in a different currency to the collateral.
CUSTODIAN: An entity that holds securities of any type for investors, effects receipts and deliveries, and supplies appropriate reporting.
DAYLIGHT EXPOSURE: The period in the day when one party to a trade has a temporary credit exposure to the other due to one side of the trade having settled before the other. It would normally mean that the loan had settled but the delivery of collateral would settle at a later time, although there would also be exposure if settlement happened in reverse order. The period extends from the point of settlement of the first side of the trade to the time of settlement of the other. It occurs because the two sides of the trade are not linked in many settlement systems or settlement of loan and collateral take place in different settlement systems, possibly in different time zones.
DELIVERY VS PAYMENT: The simultaneous delivery of securities against the payment of funds.
DIRECT LENDER: A lender that lends directly to a borrower rather than using an agent or intermediary and that has autonomy regarding all lending decisions. The lender may handle loan administration in house or may also use a third party.
DISTRIBUTIONS: Entitlements arising on securities such as dividends, interests and non-cash distributions such as bonus shares.
DIVIDEND DATE: The date upon which the issuer of the share pays the dividend to the owner (as at the ex-dividend date) of the security.
DOMESTIC STOCK: Securities that are lent from a locally domiciled source.
DRIP: Dividend Reinvestment Plan. Automatic reinvestment of shareholder dividends into more shares of the company's stock, usually at a discount.
EQUITY REPO: Any purchase agreement in which equities rather than bonds are given as collateral against cash.
EQUITY SWAP: Any equity swap is the exchange of a equity return for an interest rate return. For equity financing the cash lenders actually buys the equity from the cash borrower and then transacts the swap. During the term of the swap the cash lender received interest and pays the equity return to the borrower. At the end of the swap, which is typically transacted under 1992 International Swaps & Derivative Association master agreement, the cash lender sells the equity.
EQUIVALENT (SECURITIES OR COLLATERAL): A term denoting that the securities or collateral returned must be of an identical type, nominal value, description and amount to those originally provided. If, during the term of a loan, there is a corporate action in relation to loaned securities, the lender is normally entitled to specify at that time the form in which he wishes to receive equivalent securities or collateral on termination of the loan. The legal agreement will also specify the form in which equivalent securities or collateral are to be returned in the case of other corporate events.
EMERGING MARKET: Immature securities market in which there is not a long history of substantial foreign investment.
ERISA: The 1974 Employee Retirement Income Security Act. A law governing US Pension plan activity, which was amended in, 1981 to allow US pension funds to lend securities in accordance with specific guidelines.
ESCROW / TRIPARTY: The provision of collateral management services by a third party. This may include custody, marking to market, margin calls and delivery.
FAIL: The failure to deliver cash or collateral in time for the settlement of a transaction.
FEDERAL FUNDS RATE: Rate of interest at which federal funds are traded among banks, currently pegged by the Federal Reserve through its open market operations. Generally acknowledged as the basis upon which securities lending rebate rates are set.
FIXED TERM TRANSACTION: Transactions where the expiry date has been agreed. Nether part to the transaction can break the expiry date.
GENERAL COLLATERAL (GC): Securities that are not "special" (see definition below) in the market and may be used, typically, simply to collateralize cash borrowings. Also known as "stock collateral".
GILT-EDGE SECURITIES LENDING AGREEMENT (GESLA): The standard legal agreement for the lending UK government bonds (gilts). The agreement uses English law, is approved by the UK's Inland Revenue and was introduced in April 1996.
GILT-EDGED SECURITIES (GILTS): Government bonds issued by the United Kingdom.
GLOBAL MASTER REPURCHASE AGREEMENT (GMRA): The PSA/ISMA Global Master Repurchase Agreement is the standard repo agreement used by non-US Treasury repo practitioners. It is based on the PSAs Master Repo Agreement, but under English law, and was first introduced in November 2002. Annexes are available for repos of UK gilt-edge securities, Belgian securities and buy/sell back and agency transactions. The GMRA is endorsed by the PSA and ISMA and is often known as the PSA/ISMA agreement
GLOBAL MASTER SECURITIES LENDING AGREEMENT (GMSLA): A market standard legal agreement drafted with a view to compliance with English law. An English law opinion has been obtained on the agreement.
HAIRCUT: Initial margin on a repo transaction. Generally expressed as a percentage of the market price.
HEDGE: Making an investment in a security to reduce the risk of adverse price movements by taking an offsetting position in a related security.
HEDGE FUND: A specialist leveraged investment fund that engages in trading and hedging strategies, frequently using leverage.
HOT STOCK: A security for which demand to borrow is high relative to its availability in the market and which hence becomes expensive to borrow.
INDEMNITY: A form of guarantee or insurance, frequently offered by Agents. Terms vary significantly and the value of the indemnity does also.
INITIAL MARGIN: Initial margin is the excess of cash over securities or securities over cash in repo or securities lending transaction. One party may require a initial margin because of the perceived credit risk of the counterpart. No initial margin is typically expected in fixed income transactions but where it does occur it normally ranges from 1% to 5%. Initial margin is normally posted in securities lending transactions. Australian domestic loans are typically collateralized at 105% of their market value with cash collateral and 100% with non-cash collateral. The purpose of initial margin is usually to protect the supplier of cash with protection in the fall in market value of the collateral during the course of the trade. The size of the margin often varies between according to the volatility of the collateral and the credit standing of the counterparts.
INTERNATIONAL SECURITIES LENDERS ASSOCIATION (ISLA): The UK based securities lending trade association changed its name from the International Stock Lenders Association in May 1996.
LIBOR: The London Interbank Offered Rate on Eurodollar Deposits traded between banks. The basis upon which many interest rate levels are set.
MANUFACTURED DIVIDENDS: When securities that have been lent to pay a dividend, the borrower of the securities is required to pass the dividend on to the lender of securities. This payment is known as a manufactured dividend (as opposed to the normal dividend paid by the issuer of the securities) and will be an amount equal to the gross coupon. Manufactured dividends cause tax problems in some markets.
MARGIN CALL: A request by one party in a transaction for the initial margin to be reinstated or to restore the original cash/securities ratio to parity.
MARGIN, INITIAL: Refers to the excess of cash over securities or securities over cash in a repo/reverse repo, sell/buy-buy/sell, or securities lending transaction. One party may require an initial margin due to the perceived credit risk of the counterpart. No initial margin is typically expected in fixed-income transactions, but where it does occur, it normally ranges from 1% to 3%.
MARGIN, VARIATION: Once a repo or securities lending transaction has settled. The variation margin on a repo or securities lending transaction refers to the band within which the value of the security used as collateral may fluctuate before triggering a margin call. Variation margin may be expressed either in percentage or absolute currency terms. The GMRA (See PSA/ISMA Global Master Repurchase Agreement) states that all legitimate requests for variation margin must be honored.
MARK-TO-MARKET: The act of revaluing the securities collateral in a repo or securities lending transaction to current market values. This maybe done daily or at a suitable interval agreed upon by the parties to a transaction.
MARKET VALUE: The value of loan securities or collateral as determined using the last (or latest available) sale price on the principal exchange where the instrument was traded or, if not so traded, using the most recent bid or offered prices.
MASTER REPURCHASE AGREEMENT: The standard legal agreement for repos in the US, under New York law.
MATCHED/MISMATCHED BOOK: Refers to the interest rate arbitrage book that a securities lending/repo trader may run. By matching/mismatching maturities, rates, currencies or borrowing margins, the stock lender/repo trader creates a profit or loss.
NON CASH COLLATERAL: Where securities such as equities or bonds are pledged to the lender as support of a loan transaction in lieu of cash.
NON DOMESTIC STOCK ALSO KNOWN AS FOREIGN STOCK: Securities that are lent from a foreign/overseas domicile source.
OPEN REPO: Repos which have no fixed term. They are automatically rolled over daily until one of the counterparts ends the agreement. At each rollover the repo rate is adjusted and the supplier of cash has the right to vary the amount. The supplier of collateral has the right to substitute it.
OPEN TERM TRANSACTION: Transactions without a fixed term.
OVERCOLLATERALIZATION: Over-collateralization protects a counterpart form a reduction in the market value of the collateral because of a fall in its market value.
OVERNIGHT REPO: A Repo that matures on the day following its value date.
PASLA: The Pan Asia Securities Lending Association
PRIME BROKERAGE: A service offered to hedge funds and other customers by securities house to support their trading, investment and hedging activities. The service comprises of clearing, custody, securities lending and financing arrangements. Effectively a non-stop banking service to eliminate the need for the hedge fund to have a large back office and multiple clearance relationships.
PRINCIPLE: A principle is a party to a loan transaction that acts on its behalf (and therefore always represents its own risks rather than that of a client).
PROPRIETARY TRADING: Trading activity conducted by a securities firm for its own account rather than for its clients.
REBATE: A method of fee quotation used in the international securities lending market, the rebate is the difference between the interest rate obtained by the lender (on cash collateral lodged with the lender by the borrower) and the loan fee the lender wishes to charge.
REBATE RATE: The interest paid on the cash side of a securities lending transaction. A rebate rate of interest implies a fee for the loan of securities.
RECALL: A request by a lender for the return of securities from a borrower.
REPO: A transaction whereby one party sells securities to another party and agrees to repurchase the securities at a future date at a fixed price.
REPO (OR REVERSE) TO MATURITY: A repo or reverse repo that matures on the maturity date of the security traded.
REPO RATE: The interest rate paid on the cash side of a repo/reverse transaction.
REPO TO MATURITY: A repo that matures on the maturity date of the security repo-ed.
REPRICING: Occurs when the market value of a security in a repo or securities lending transaction changes and the parties to the transaction agree to adjust the amount of securities or cash in a transaction to the correct margin level.
RETURN: Occurs when the borrower of securities returns them to the lender.
REVERSE REPO: The mirror image of a repo. The party that is reversing purchases securities from another party and simultaneously agrees to resell the securities at a future date at a fixed price.
SECURITIES FINANCE: The exchanging of Securities for other Collateral (e.g. Cash, Equities, Government Bonds or Convertible Bonds) via Securities Lending (see below) Repos (see below), Swaps or any other method as agreed between the counterparts to the transaction. This term is now in general use to describe all the businesses mentioned below.
SECURITIES LENDING: A contract which commits two counterparts to exchange agreed securities against collateral and to subsequently reverse the exchange at an agreed future date or on demand. The counterpart borrowing the securities pays a fee to the other counterpart.
SETTLEMENT: Final transfer of securities and cash in fulfillment of the obligations committed to in an executed trade.
SHARES IN ISSUE: The number of shares available in the market Securities that for a given security as at the reporting date.
SHORT SALE: A transaction in which a market participant sells a security that he or she does not own with the expectation that the price of the security will fall or in connection with an arbitrage strategy. A broker/dealer may borrow the needed security on a temporary basis to effect settlement. Eventually, however, the broker/dealer must purchase the security in order to redeliver the borrowed security.
SHORT SQUEEZE (BEAR SQUEEZE): Where one or more market participants reduce liquidity by withholding securities that are "special"/in high demand for any of several reasons, are sought after in the market by borrowers. Holders of special securities will be able to earn incremental income on the securities by lending them out via repo, sell/buy, or securities lending transactions.
SPECIALS: Securities that for any of several reasons are sought after in the market by borrowers. Holders of special securities will be able to earn incremental income on the securities by lending them out via repo, sell/buy, or securities lending transactions.
SPREAD: The difference between the investment rate on cash collateral and the rebate rate of a loan; in investments, the difference between bid and asked price on a security or the difference between yields on or prices of two securities that have different characteristics or maturities.
STRUCTURED REPO: A transaction, which enables a cash lender to give its counterpart, cash to a pre-arranged schedule. It allows the lender to look in a term rate while retaining and liquidity.
SUBSTITUTION: The ability of a lender of general collateral to recall securities from a borrower and replace them with other securities of the same value.
TERM REPO: A repo with a maturity of more than one day after its value date.
TERM TRANSACTIONS: Trades with a fixed maturity date.
THIRD PARTY AGENCY LENDING: Where the agent lends securities on behalf of a beneficial owner and the agent has autonomy over the transaction. The agent also takes responsibility for the marking to market of collateral (cash or non-cash) margin calls and investing of cash collateral. Revenues are then shared between client and agent.
THIRD-PARTY LENDING: The system whereby an institution lends directly to a borrower and retains decision-making power, while all administration (settlement collateral monitoring, and so on) is handled by a third party, such as a global custodian.
TRI-PARTY REPO: Repo used for funding/investment purposes in which bonds and cash are delivered by the trading counterparts to an independent custodian bank or clearing house (the 'Tri-party Custodian") that is responsible for ensuring the maintenance of adequate collateral value, both at the outset of a trade and over its term. The Tri-party Custodian marks the collateral to market daily and makes margin calls on either counterpart, as required. Tri-party repo reduces the operational/systems barriers to participating in the repo markets.
VALUE: The value of loan securities or collateral as determined using the last (or latest available) sale price on the principal exchange where the instrument was traded or, if not so traded, using the most recent bid or offered prices.
Sunil Daswani is a Senior Vice President and is responsible for the relationship management team for all of Northern Trust's global clients (ex North America) who participate in Securities lending. He also leads the sales efforts for any new clients interested in Northern Trust's Securities Lending capabilities and may be interested in participating in our lending programme.
Sunil previously acted as Director and Regional Manager for Securities Lending, Asia for Northern Trust Global Investments based in Hong Kong. There he was responsible for addressing and evaluating securities lending initiatives for lenders and borrowers where Northern Trust acted as an agent lender. Sunil additionally focused on building the supply of Asian assets for Northern Trust global securities lending program ensuring that the due diligence was carried out when lending its clients assets in each jurisdiction. Sunil was also the Chairman of the Pan Asia Securities Lending Association (PASLA), from 2005 through 2008.
Prior to this position, Sunil was a Global Custody product manager at Citigroup.
Sunil holds a BSc. (Economics) in Accounting & Finance from the London School of Economics (1993).
Northern Trust Corporation. Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A. Incorporated with limited liability in the U.S. Products and services provided by subsidiaries of Northern Trust Corporation may vary in different markets and are offered in accordance with local regulation. For more information, read our legal and regulatory information about individual market offices.
Northern Trust Asset Management comprises Northern Trust Investments, Inc., Northern Trust Global Investments Limited, Northern Trust Global Investments Japan, K.K., NT Global Advisors, Inc., 50 South Capital Advisors, and investment personnel of The Northern Trust Company of Hong Kong Limited and The Northern Trust Company.
This material is directed to professional clients only and is not intended for retail clients. For Asia-Pacific markets, it is directed to institutional investors, expert investors and professional investors only and should not be relied upon by retail investors.
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